Hess Midstream LP Announces Distribution Per Share Level Increase

Rhea-AI Summary

Hess Midstream (NYSE: HESM) has announced a quarterly cash distribution of $0.7012 per Class A share for Q4 2024, representing an increase of $0.0166 per share compared to Q3 2024. This increase is supported by excess adjusted free cash flow following the company's $100 million unit repurchase in January 2025.

The distribution growth exceeds Hess Midstream's targeted 5% annual distribution growth through 2026. The company has achieved approximately 55% increase in distribution per Class A share since Q1 2021 and over 10% since Q4 2023. Management expects over $1.25 billion of financial flexibility through 2026 to support their return of capital framework. The quarterly distribution will be paid on February 14, 2025, to shareholders of record as of February 6, 2025.

Positive

• Quarterly distribution increased by $0.0166 per Class A share
• Distribution growth exceeds targeted 5% annual growth rate
• 55% increase in distribution per share since Q1 2021
• $1.25 billion financial flexibility through 2026
• Successful completion of $100 million unit repurchase in January 2025

Negative

• None.

Insights

Financial Analyst

This distribution increase announcement showcases Hess Midstream's robust financial position and shareholder-friendly capital allocation strategy. The $0.7012 quarterly distribution represents an impressive 55% growth since Q1 2021, significantly outpacing the industry average and their own targeted 5% annual growth rate.

The company's strategic approach combines two powerful shareholder return mechanisms:

• Regular distribution growth targeting 5% annually through 2026
• Opportunistic unit repurchases that enable additional distribution increases through reduced share count

The $100 million unit repurchase in January 2025 demonstrates the company's commitment to maximizing shareholder value through efficient capital deployment. The reduction in outstanding units allows for higher per-share distributions without increasing the total cash outlay, creating a sustainable path for continued distribution growth.

The projected $1.25 billion in financial flexibility through 2026 provides substantial runway for future capital returns. This strong financial position is particularly noteworthy in the midstream sector, where stable cash flows and efficient capital allocation are important for maintaining competitive advantages.

The company's ability to consistently exceed its distribution growth targets while maintaining financial flexibility suggests a well-managed balance sheet and strong operational execution. This strategic approach to capital allocation positions Hess Midstream favorably among its peers in the midstream energy sector.

HOUSTON--(BUSINESS WIRE)-- Hess Midstream LP (NYSE: HESM) (“Hess Midstream”), today announced that the Board of Directors of its general partner declared a quarterly cash distribution of $0.7012 per Class A share for the quarter ended December 31, 2024, an increase of $0.0166 per Class A share as compared with the third quarter of 2024. This increase is supported by excess adjusted free cash flow after distributions from the reduction in total units following Hess Midstream’s accretive $100 million unit repurchase in January 2025 and, on an annualized basis, is significantly above Hess Midstream’s targeted 5% growth in annual distributions per Class A share through 2026.

“We continue to execute on our differentiated financial strategy, prioritizing consistent and ongoing return of capital to our shareholders,” said Jonathan Stein, Chief Financial Officer of Hess Midstream. “With today’s announcement, we have once again utilized excess adjusted free cash flow after distributions from the reduction in total units following the accretive unit repurchase to provide further return of capital to our shareholders. Through a combination of our 5% targeted growth in annual distributions per Class A share and incremental increases in our quarterly distributions following unit repurchases, we have increased our distribution per Class A share by approximately 55% since the first quarter of 2021 and by over 10% since the fourth quarter of 2023. We expect to continue to have more than $1.25 billion of financial flexibility through 2026 that can be used to support our return of capital framework, including potential additional and ongoing unit repurchases that could support further distribution per share level increases.”

The quarterly distribution will be payable on February 14, 2025, to Class A shareholders of record as of the close of business on February 6, 2025.

About Hess Midstream

Hess Midstream LP is a fee-based, growth-oriented midstream company that owns, operates, develops and acquires a diverse set of midstream assets to provide services to Hess Corporation (“Hess”) and third-party customers. Hess Midstream owns oil, gas and produced water handling assets that are primarily located in the Bakken and Three Forks Shale plays in the Williston Basin area of North Dakota. More information is available at www.hessmidstream.com.

Cautionary Note Regarding Forward-looking Information

This press release contains “forward-looking statements” within the meaning of U.S. federal securities laws. Words such as “anticipate,” “estimate,” “expect,” “forecast,” “guidance,” “could,” “may,” “should,” “would,” “believe,” “intend,” “project,” “plan,” “predict,” “will,” “target” and similar expressions identify forward-looking statements, which are not historical in nature. Our forward-looking statements may include, without limitation: our future financial and operational results, including our ability to increase our distributions or achieve our targeted distribution growth rate; our business strategy and profitability; future economic and market conditions in the oil and gas industry; and our ability to execute future accretive opportunities, including incremental return of capital to shareholders and potential incremental unit repurchases.

Forward-looking statements are based on our current understanding, assessments, estimates and projections of relevant factors and reasonable assumptions about the future. Forward-looking statements are subject to certain known and unknown risks and uncertainties that could cause actual results to differ materially from our historical experience and our current projections or expectations of future results expressed or implied by these forward-looking statements. The following important factors could cause actual results to differ materially from those in our forward-looking statements: the ability of Hess and other parties to satisfy their obligations to us, including Hess’ ability to meet its drilling and development plans on a timely basis or at all, its ability to deliver its nominated volumes to us, and the operation of joint ventures that we may not control; our ability to generate sufficient cash flow to pay current and expected levels of distributions; reductions in the volumes of crude oil, natural gas, natural gas liquids (“NGLs”) and produced water we gather, process, terminal or store; the actual volumes we gather, process, terminal and store for Hess in excess of our minimum volume commitments and relative to Hess’ nominations; fluctuations in the prices and demand for crude oil, natural gas and NGLs; changes in global economic conditions and the effects of a global economic downturn or inflation on our business and the business of our suppliers, customers, business partners and lenders; our ability to comply with government regulations or make capital expenditures required to maintain compliance, including our ability to obtain or maintain permits necessary for capital projects in a timely manner, if at all, or the revocation or modification of existing permits; our ability to successfully identify, evaluate and timely execute our capital projects, investment opportunities and growth strategies, whether through organic growth or acquisitions; costs or liabilities associated with federal, state and local laws, regulations and governmental actions applicable to our business, including legislation and regulatory initiatives relating to environmental protection and health and safety, such as spills, releases, pipeline integrity and measures to limit greenhouse gas emissions and climate change; our ability to comply with the terms of our credit facility, indebtedness and other financing arrangements, which, if accelerated, we may not be able to repay; reduced demand for our midstream services, including the impact of weather or the availability of the competing third-party midstream gathering, processing and transportation operations; potential disruption or interruption of our business due to catastrophic events, such as accidents, severe weather events, labor disputes, information technology failures, constraints or disruptions and cyber-attacks; any limitations on our ability to access debt or capital markets on terms that we deem acceptable, including as a result of weakness in the oil and gas industry or negative outcomes within commodity and financial markets; liability resulting from litigation; risks and uncertainties associated with Hess’ proposed merger with Chevron Corporation; and other factors described in Item 1A—Risk Factors in our Annual Report on Form 10-K and any additional risks described in our other filings with the Securities and Exchange Commission.

As and when made, we believe that our forward-looking statements are reasonable. However, given these risks and uncertainties, caution should be taken not to place undue reliance on any such forward-looking statements since such statements speak only as of the date when made and there can be no assurance that such forward-looking statements will occur and actual results may differ materially from those contained in any forward-looking statement we make. Except as required by law, we undertake no obligation to publicly update or revise any forward-looking statements, whether because of new information, future events or otherwise.

View source version on businesswire.com: https://www.businesswire.com/news/home/20250127668356/en/

Investor Contact:

Jennifer Gordon

(212) 536-8244

Media Contact:

Lorrie Hecker

(212) 536-8250

Source: Hess Midstream LP

FAQ

What is HESM's new quarterly distribution per Class A share for Q4 2024?

Hess Midstream's quarterly distribution for Q4 2024 is $0.7012 per Class A share, an increase of $0.0166 compared to Q3 2024.

How much has HESM's distribution per share increased since Q1 2021?

HESM's distribution per Class A share has increased by approximately 55% since the first quarter of 2021.

When will HESM pay its Q4 2024 quarterly distribution?

The quarterly distribution will be paid on February 14, 2025, to shareholders of record as of February 6, 2025.

How much financial flexibility does HESM expect through 2026?

Hess Midstream expects to have more than $1.25 billion of financial flexibility through 2026 to support its return of capital framework.

What was the value of HESM's unit repurchase in January 2025?

Hess Midstream completed a $100 million unit repurchase in January 2025.